Strengths and weaknesses of them

 

These reforms are aimed at creating efficient and competitive securities market subject to effective regulation by SEBI, which would ensure investor protection. A Profile: The corporate securities market in India dates back to the 18^th century when the securities of the East India Company were traded in Mumbai and Kolkotta. The brokers used to gather under a Banyan tree in Mumbai and under a Neem tree in Kolkota for the purpose of trading those securities. However the real beginning came in the 1850’s with the introduction of joint stock companies with limited liability. The 1860’s witnessed feverish dealings in securities and reckless speculation. This brought brokers in Bombay together in July 1875 to form the first formally organized stock exchange in the country viz. The Stock Exchange, Mumbai. Ahmedabad stock exchange in 1894 and 22 others followed this in the 20th century. The process of reforms has led to a pace of growth almost unparalleled in the history of any country. Securities market in India has grown exponentially as measured in terms of amount raised from the market, number of stock exchanges and other intermediaries, the number of listed stocks, market capitalization, trading volumes and turnover on stock exchanges, investor population and price indices. Along with this, the profiles of the investors, issuers and intermediaries have changed significantly. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency, transparency and safety, thanks to the National Stock Exchange. Indian market is now comparable to many developed markets in terms of a number of parameters.

Structure and Size of the Markets: Today India has two national exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Each has fully electronic trading platforms with around 9400 participating broking outfits. Foreign brokers account for 29 of these. There are some 9600 companies listed on the respective exchanges with a combined market capitalization near $125.5bn. Any market that has experienced this sort of growth has an equally substantial demand for highly efficient settlement procedures. In India 99.9% of the trades, according to the National Securities Depository, are settled in dematerialized form in a T+2 rolling settlement The capital market is one environment. In addition, the National Securities Clearing Corporation of India Ltd (NSCCL) and Bank of India Shareholding Ltd (BOISL), Clearing Corporation houses of NSE and BSE, guarantee trades respectively. The main functions of the Clearing Corporation are to work out (a) what counter parties owe and (b) what counter parties are due to receive on the settlement date.

Furthermore, each exchange has a Settlement Guarantee Fund to meet with any unpredictable situation and a negligible trade failure of 0.003%. The Clearing Corporation of the exchanges assumes the counter-party risk of each member and guarantees settlement through a fine-tuned risk management system and an innovative method of online position monitoring. It also ensures the financial settlement of trades on the appointed day and time irrespective of default by members to deliver the required funds and/or securities with the help of a settlement guarantee fund.

 

Style of Operating: Indian stock markets operated in the age-old conventional style of fact-to-face trading with bids and offers being made by open outcry. At the Bombay Stock Exchange, about 3,000 persons would mill around in the trading ring during the trading period of two hours from 12.00 noon to 2.00 p.m. Indian stock markets basically quote-driven markets with the jobbers standing at specific locations in the trading ring called trading posts and announcing continuously the two-way quotes for the scrips traded at the post. Markets vary in location, types, geographic range and size. The main purpose of a market is to facilitate trade and distribute resources to the economy. A competitive market (also called monopolistic competition) is one that has multiple buyers and sellers. In a perfectly competitive market, multiple suppliers have an insignificant market share; standardized or homogeneous products are supplied by each supplier; customers have full information on prices and trends; all industry participants (new and existing sellers) have equal access to technology and other resources; there are no barriers to exit and entry; and the market is open to external competition.

A competitive market serves as a benchmark for other real-world markets. A monopoly or monopolistic market is one that has only one firm (or seller) that has the autonomy to raise and lower prices without affecting the demand for its services and products. Monopolies serve the needs of the sellers but are detrimental to customers. They are characterized by an absence of economic competition, technological superiority, no substitute for goods sold and a seller having full control of market power (the ability to lower and raise the prices without losing clients or customers).

Examples of monopolies include public utility companies (water, electricity and gas) and Internet service providers in remote areas. A monopsony is a type of market in which a single powerful buyer controls and affects market prices. Multiple sellers offer goods and services, but there is only a single buyer who has exclusive control of market power and can bring the prices of goods/services down. According to the textbook "Microeconomics: Principles and Applications," a pure monopsony is rare. A widespread trend in economic history and sociology is skeptical of the idea that it is possible to develop a theory to capture an essence or unifying thread to markets. For economic geographers, reference to regional, local, or commodity specific markets can serve to undermine assumptions of global integration, and highlight geographic variations in the structures, institutions, histories, path dependencies, forms of interaction and modes of self-understanding of agents in different spheres of market exchange. An example of a monopsony is a coal company in a small town. An oligopoly market is characterized by a limited number of competing sellers who sell similar or different products. Sellers compete with each other by aggressive advertising and improved service delivery. An oligopoly sets barriers to entry and makes it difficult for new sellers to enter the market. Barriers include patent rights, financial requirements and legal barriers. Tobacco companies and airlines are oligopolies. An oligopsony market has a few buyers and multiple sellers. A duopsony is a type of oligopsony that has two buyers. The buyers affect each other's buying action. An example of an oligopsony is the Kazakhstani people fast food market, in which a few major buyers control the meat market.

Rather, a variety of new markets have emerged, such as for carbon trading or rights to pollute. In some cases, such as emerging markets for water, different forms of privatization of different aspects of previously state run infrastructure have created hybrid private-public formations and graded degrees of commoditization, commercialization, and privatization. Problematic for market formalism is the relationship between formal capitalist economic processes and a variety of alternative forms, ranging from semi-feudal and peasant economies widely operative in many developing economies, to informal markets, barter systems, worker cooperatives, or illegal trades that occur in most developed countries. Practices of incorporation of non-Western peoples into global markets in the nineteenth and twentieth century did not merely result in the quashing of former social economic institutions. Rather, various modes of articulation arose between transformed and hybridized local traditions and social practices and the emergence world economy. So called capitalist markets, in fact, include and depend on a wide range of geographically situated economic practices that do not follow the market model. Economies are thus hybrids of market and non-market elements.  Helpful here is J. K. Gibson-Graham’s complex topology of the diversity of contemporary market economies describing different types of transactions, labour, and economic agents. Transactions can occur in underground markets (such as for marijuana) or be artificially protected (such as for patents). They can cover the sale of public goods under privatization schemes to co-operative exchanges and occur under varying degrees of monopoly power and state regulation. Likewise, there are a wide variety of economic agents, which engage in different types of transactions on different terms: One cannot assume the practices of a religious kindergarten, multinational corporation, state enterprise, or community-based cooperative can be subsumed under the same logic of calculability. This emphasis on proliferation can also be contrasted with continuing scholarly attempts to show underlying cohesive and structural similarities to different markets.

A prominent entry-point for challenging the market model's applicability concerns exchange transactions and the homo economics assumption of self-interest maximization. As of 2012 a number of streams of economic sociological analysis of markets focus on the role of the social in transactions, and on the ways transactions involve social networks and relations of trust, cooperation and other bonds. Economic geographers in turn draw attention to the ways in exchange transactions occur against the backdrop of institutional, social and geographic processes, including class relations, uneven development, and historically contingent path-dependencies. Michel Callon's concept of framing provides a useful schema: each economic act or transaction occurs against, incorporates and also re-performs a geographically and cultural specific complex of social histories, institutional arrangements, rules and connections. These network relations are simultaneously bracketed, so that persons and transactions may be disentangled from thick social bonds. The character of calculability is imposed upon agents as they come to work in markets and are "formatted" as calculative agencies. Market exchanges contain a history of struggle and contestation that produced actors predisposed to exchange. An emerging theme worthy of further study is the interrelationship, interpenetrability and variations of concepts of persons, commodities, and modes of exchange under particular market formations. This is most pronounced in recent movement towards post-structuralism theorizing that draws on Foucault and Actor Network Theory and stress relational aspects of personhood, and dependence and integration into networks and practical systems. Commodity network approaches further both deconstruct and show alternatives to the market models concept of commodities. Here, both researchers and market actors are understood as reframing commodities in terms of processes and social and ecological relationships. Rather than a mere objectification of things traded, the complex network relationships of exchange in different markets calls on agents to alternatively deconstruct or “get with” the fetish of commodities. Gibson-Graham thus read a variety of alternative markets, for fair trade and organic foods, or those using local exchange trading systems as not only contributing to proliferation, but also forging new modes of ethical exchange and economic subjectivities. In social systems theory, markets are also conceptualized as inner environments of the economy. As horizon of all potential investment decisions the market represents the environment of the actually realized investment decisions. Such inner environments, however, can also be observed in further function systems of society like in political, scientific, religious or mass media systems.

As there is no prohibition on a jobber acting as a broker and vice versa, any member is free to do jobbing on any day. In actual practice, however, a class of jobbers has emerged who generally confine their activities to jobbing only. As there are no serious regulations governing the activities of jobbers, the jobbing system is beset with a number of problems like wide spreads between bid and offer; particularly in thinly traded securities, lack of depth, total absence of jobbers in a large number of securities, etc. In highly volatile scrips, however, the spread is by far the narrowest in the world being just about 0.1 to 0.25 percent as compared to about 1.25 per cent in respect of alpha stocks, i.e. the most highly liquid stocks, at the International Stock Exchange of London. The spreads widen as liquidity decreases, being as much as 25 to 30 per cent or even more while the average touch of gamma stocks, i.e. the least liquid stocks at the International Stock Exchange, London, is just about 6 to 7 per cent. This is basically because of the high velocity of transactions in the active scrips. In fact, shares in the specified group account for over 75 percent of trading in the Indian stock markets while over 25 percent of the securities do not get traded at all in any year. Yet, it is significant to note that out of about 6,000 securities listed on the Bombay Stock Exchange, about 1,200 securities get traded on any given trading day. The question of automating trading has always been under the active consideration of the Bombay Stock Exchange for quite sometime. It has decided to have trading in all the non-specified stocks numbering about 4,100 totally on the computer on a quote-driven basis with the jobbers, both registered and roving, continuously keying in their bids and offers into the computer with the market orders getting automatically executed at the touch and the limit orders getting executed at exactly the rate specified. In March 1995, the BSE started the computerized trading system, called BOLT - BSE on-line trading system. Initially only 818 scripts were covered under BOLT. In July 1995, all scripts (more than 5,000) were brought under the computerized trading system. The advantages realized are: (a) improved trading volume; (b) reduced spread between the buy-sell orders; c) better trading in odd lot shares, rights issues etc. Highlights of the Highly Attractive Indian Equity Market: Two major reasons why Indian securities are now increasingly regarded as attractive to international investors are the relatively high returns compared with more developed global markets as well as the low correlation with world markets.

 

 

 

 

 

 

 

 

 

 

Conclusion

 

Markets vary in location, types, geographic range and size. The main purpose of a market is to facilitate trade and distribute resources to the economy. A competitive market (also called monopolistic competition) is one that has multiple buyers and sellers. In a perfectly competitive market, multiple suppliers have an insignificant market share; standardized or homogeneous products are supplied by each supplier; customers have full information on prices and trends; all industry participants (new and existing sellers) have equal access to technology and other resources; there are no barriers to exit and entry; and the market is open to external competition.

A competitive market serves as a benchmark for other real-world markets. A monopoly or monopolistic market is one that has only one firm (or seller) that has the autonomy to raise and lower prices without affecting the demand for its services and products. Monopolies serve the needs of the sellers but are detrimental to customers. They are characterized by an absence of economic competition, technological superiority, no substitute for goods sold and a seller having full control of market power (the ability to lower and raise the prices without losing clients or customers).

Examples of monopolies include public utility companies (water, electricity and gas) and Internet service providers in remote areas. A monopsony is a type of market in which a single powerful buyer controls and affects market prices. Multiple sellers offer goods and services, but there is only a single buyer who has exclusive control of market power and can bring the prices of goods/services down. According to the textbook "Microeconomics: Principles and Applications," a pure monopsony is rare. A widespread trend in economic history and sociology is skeptical of the idea that it is possible to develop a theory to capture an essence or unifying thread to markets. For economic geographers, reference to regional, local, or commodity specific markets can serve to undermine assumptions of global integration, and highlight geographic variations in the structures, institutions, histories, path dependencies, forms of interaction and modes of self-understanding of agents in different spheres of market exchange. An example of a monopsony is a coal company in a small town. An oligopoly market is characterized by a limited number of competing sellers who sell similar or different products. Sellers compete with each other by aggressive advertising and improved service delivery. An oligopoly sets barriers to entry and makes it difficult for new sellers to enter the market. Barriers include patent rights, financial requirements and legal barriers. Tobacco companies and airlines are oligopolies. An oligopsony market has a few buyers and multiple sellers. A duopsony is a type of oligopsony that has two buyers. The buyers affect each other's buying action. An example of an oligopsony is the Kazakhstani people fast food market, in which a few major buyers control the meat market.

Rather, a variety of new markets have emerged, such as for carbon trading or rights to pollute. In some cases, such as emerging markets for water, different forms of privatization of different aspects of previously state run infrastructure have created hybrid private-public formations and graded degrees of commoditization, commercialization, and privatization. Problematic for market formalism is the relationship between formal capitalist economic processes and a variety of alternative forms, ranging from semi-feudal and peasant economies widely operative in many developing economies, to informal markets, barter systems, worker cooperatives, or illegal trades that occur in most developed countries. Practices of incorporation of non-Western peoples into global markets in the nineteenth and twentieth century did not merely result in the quashing of former social economic institutions. Rather, various modes of articulation arose between transformed and hybridized local traditions and social practices and the emergence world economy. So called capitalist markets, in fact, include and depend on a wide range of geographically situated economic practices that do not follow the market model. Economies are thus hybrids of market and non-market elements.  Helpful here is J. K. Gibson-Graham’s complex topology of the diversity of contemporary market economies describing different types of transactions, labour, and economic agents. Transactions can occur in underground markets (such as for marijuana) or be artificially protected (such as for patents). They can cover the sale of public goods under privatization schemes to co-operative exchanges and occur under varying degrees of monopoly power and state regulation. Likewise, there are a wide variety of economic agents, which engage in different types of transactions on different terms: One cannot assume the practices of a religious kindergarten, multinational corporation, state enterprise, or community-based cooperative can be subsumed under the same logic of calculability (pp. 53–78). This emphasis on proliferation can also be contrasted with continuing scholarly attempts to show underlying cohesive and structural similarities to different markets.

A prominent entry-point for challenging the market model's applicability concerns exchange transactions and the homo economics assumption of self-interest maximization. As of 2012 a number of streams of economic sociological analysis of markets focus on the role of the social in transactions, and on the ways transactions involve social networks and relations of trust, cooperation and other bonds. Economic geographers in turn draw attention to the ways in exchange transactions occur against the backdrop of institutional, social and geographic processes, including class relations, uneven development, and historically contingent path-dependencies. Michel Callon's concept of framing provides a useful schema: each economic act or transaction occurs against, incorporates and also re-performs a geographically and cultural specific complex of social histories, institutional arrangements, rules and connections. These network relations are simultaneously bracketed, so that persons and transactions may be disentangled from thick social bonds. The character of calculability is imposed upon agents as they come to work in markets and are "formatted" as calculative agencies. Market exchanges contain a history of struggle and contestation that produced actors predisposed to exchange. An emerging theme worthy of further study is the interrelationship, interpenetrability and variations of concepts of persons, commodities, and modes of exchange under particular market formations. This is most pronounced in recent movement towards post-structuralism theorizing that draws on Foucault and Actor Network Theory and stress relational aspects of personhood, and dependence and integration into networks and practical systems.

Commodity network approaches further both deconstruct and show alternatives to the market models concept of commodities. Here, both researchers and market actors are understood as reframing commodities in terms of processes and social and ecological relationships. Rather than a mere objectification of things traded, the complex network relationships of exchange in different markets calls on agents to alternatively deconstruct or “get with” the fetish of commodities. Gibson-Graham thus read a variety of alternative markets, for fair trade and organic foods, or those using local exchange trading systems as not only contributing to proliferation, but also forging new modes of ethical exchange and economic subjectivities. In social systems theory, markets are also conceptualized as inner environments of the economy. As horizon of all potential investment decisions the market represents the environment of the actually realized investment decisions. Such inner environments, however, can also be observed in further function systems of society like in political, scientific, religious or mass media systems.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

 

1. Aspers, Patrik (2011) Markets Cambridge: Polity Press.
2. Bakker, Karen (2005) “Neoliberalizing Nature?: Market Environmentalism in water supply in England and Wales” Annals of the Association of American Geographers 95 (3), 542-565.
3. Bourdieu, Pierre (1999) Acts of Resistance: Against the Tyranny of the Market. The New Press.
4. Callon, Michel (1998) "Introduction: The Embeddedness of Economic Markets in Economics." In The Laws of the Markets, edited by Michel Callon. Basic Blackwell/The Sociological Review pp 1–57
5. Gibson-Graham, J.K. (2006) Postcapitalist Politics. University of Minnesota Press,.
6. Harvey, David (2005) A Short History of Neoliberalism Oxford University Press.
7. Hughes, Alex (2005) “Geographies of Exchange and Circulation: alternative trading spaces” Progress in Human Geography
8. Lukács, Georg. (1971) History and Class Consciousness. Trans. Rodney Livingstone. Merlin Press. London.
9. MacPherson, C.B. (1962) The Political Theory of Possessive Individualism: From Hobbes to Locke. Oxford Clarendon Press.
10. Marshall, A. (1961). Principles of Economics. C. W. Guillebaud, Ed. 2 Vol. London: Macmillan.
11. Martin, Ron (2000) “Institutional Approaches in Economic Geography” Handbook of Economic Geography. Ed. Eric Sheppard and Trevor J. Barnes. Blackwell Publishers.
12. Mitchell, Timothy (2002) Rule of Experts University of California Press.;
13. Nathaus, Klaus & David Gilgen (Eds.): Change of Markets and Market Societies: Concepts and Case Studies. Historical Social Research 36 (3), Special Issue, 2011.
14. Peck, J. (2005) “Economic Geographies in Space” Economic Geography 81(2) 129-175.
15. Roth, S. (2012) "Leaving commonplaces on the commonplace. Cornerstones of a polyphonic market theory" Journal of Critical Organization Inquiry 10(3) 43-52.
16. Swedberg, Richard (1994) “Markets as Social Structures” The Handbook of Economic Sociology. Ed. Neil Smelser and Richard Swedberg. Princeton University Press. 255-282.

 

 

 

 

 

 

 

 

 

 

 

 

Applications

Application №1

 

Traditionally, a “market”  was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class (such as the housing market or the grain market).

Five basic markets and their connecting flows are shown in below diagram.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Application №2

 

The below diagram shows the simple relationship between industry and market.

 

 

Source: Marketing Management 14^th Edition – Kotler and Keller

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MINISTRY OF EDUCATION AND SCIENCE OF THE REPUBLIC OF KAZAKHSTAN

INTERNATIONAL INFORMATION TECHNOLOGIES UNIVERSITY

DEPARTMENT OF MANAGEMENT AND SOCIAL SCIENCES

 

 

 

COURSE WORK

On topic “Types of Markets”